Sales Tax Fundamentals
Get up to speed on the basics of sales tax
The results are in: See what financial professionals say they need to reach their potential
bySeptember 23, 2021
The pandemic kickstarted a digital transformation. Instead of shopping online, consumers hunkered down at home and made purchases from their couch. This shift in consumer buying habits has financial professionals in the e-commerce space challenged with changing roles and responsibilities.
We surveyed more than 500 financial professionals in order to better understand how they are navigating e-commerce compliance — as well as how they foresee the landscape changing in the future. We’re bringing you the results and the insights they’ve provided in a three-part report.
In part one of the report, “The Acceleration of E-Commerce and the Impact on Compliance,” we asked participants about their greatest challenges in compliance, and how they see those challenges shifting over time. In case you missed it, download part one here.
In Part Two, “Addressing the Needs of Financial Professionals,” we analyzed how those on the front lines of these changes are handling their shifting roles. How are financial roles evolving in response to e-commerce growth? What has impacted the decision to automate sales tax compliance for this group? We’re excited to share some highlights from part two with you.
Challenges for financial professionals
In an ideal world, financial professionals would spend their time focusing on managing profit and growing revenue. But due to the complexities of sales tax compliance, these tasks tend to come first. The research is clear — the complexity of managing sales tax is one of the most common concerns financial professionals share.
All of this complexity takes an emotional toll as well. Managing the stress that comes with getting the details of tax compliance right is another aspect of the financial professional’s job. Especially since our research found that financial professionals are increasingly overwhelmed by the requirements. And this isn’t surprising given the varying sales tax laws across states.
It’s not as simple as just logging onto a state portal and filing taxes. First you must register with each state you have sales tax in. From there you have to collect accurate sales tax, monitor changing state laws, and finally remit and file to the state. We set out to understand what financial professionals need to make this process easier for them.
The hierarchy of needs for financial professionals
You’ve probably heard of Maslow’s Hierarchy of Needs. Basically, it’s a pyramid of our human needs, with physiological necessities like food and shelter at the base and self-actualization at the peak. But what about your needs as a financial professional? How do financial leaders go beyond what’s expected and reach their true potential?
To help them feel more confident and supported throughout this process, they have three key needs. These needs can be characterized as Foundational, Functional, and Emotional.
If we look at financial professionals’ situation through the lens of Maslow’s Hierarchy of Needs, we find that they need help in addressing the basic challenges that come with their complex responsibilities. These professionals have a lot on their plate, with most of them noting five compliance tasks and responsibilities on average, a significant amount given the detailed-oriented nature of these tasks. Meeting these basic sales tax problems make up their foundational needs. On average, financial professionals face 3.48 general financial challenges, with 88% of these professionals facing sales tax compliance challenges, such as keeping up with changing regulations in each jurisdiction and making sure the correct amount of sales tax tax is collected.
Once the foundational needs are met, efficiency becomes the name of the game. Financial professionals then turn to software programs, finance teams and tax consultants to implement and support the decision-making they do on a daily basis. Of those we surveyed, 71% of financial professionals use more than one solution to meet their functional needs. A combination of people resources, software tools, and external consultants. These are their functional needs.
Finally, it’s time to meet the emotional needs. By this, we mean what solutions are generating greater feelings of confidence and support for these financial professionals? The answer is easy: automation. Providing automation tools to ease these pain points is a simple but significant way to support this confidence.The data doesn’t lie: 64% of financial professionals who use automation report greater levels of confidence than those who do not. Even more, 6/10 six professionals who use automation feel more prepared in the realm of sales tax and sales tax compliance.
If you are looking for the right software for sales tax automation, TaxJar is here to help. AutoFile is our automatic electronic filing service for state sales tax, built on best-in-class technology. Once enrolled in a particular state, we’ll use the data that we receive from your e-commerce platforms or ERP systems to prepare and submit an accurate return along with your remittance.
Download Part Two: Addressing the Needs of Financial Professionals to see even more data and survey results from 500+ financial professionals. And register for our upcoming webinar where the architects of the report will dig deep on the survey results and discuss the future of e-commerce compliance.